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Budget 2020 rebates and waivers helpful but pressing rental and wage concerns remain, say business operators

SINGAPORE — Business owners and stakeholders in the food services, retail and tourism industry were thankful for the support measures unveiled during the Budget statement on Tuesday (Feb 18). However, some of them said that the initiatives were still not as targeted and immediate as they had hoped during this crucial period of the Covid-19 outbreak.

A view of a cafe in a hotel taken on Feb 18, 2020. The Government has put out a special package to help businesses in the tourism, retail and food services sector, but some business operators are still edgy.

A view of a cafe in a hotel taken on Feb 18, 2020. The Government has put out a special package to help businesses in the tourism, retail and food services sector, but some business operators are still edgy.

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SINGAPORE — Business owners and stakeholders in the food services, retail and tourism industry were thankful for the support measures unveiled during the Budget statement on Tuesday (Feb 18). However, some of them said that the initiatives were still not as targeted and immediate as they had hoped during this crucial period of the Covid-19 outbreak.

Food-and-beverage (F&B) operators as well as companies in the tourism sector interviewed by TODAY said that a few of the support schemes do not address some of their more pressing cash-flow concerns such as rental costs and wages for their foreign workers, for example.

In announcing the Budget, Finance Minister Heng Swee Keat laid out the Government’s plan to shore up businesses pummelled by the sharp drop in traffic and sales.

One of these is a 30 per cent property tax rebate to be granted this year to accommodation and function-room segments of licensed hotels and serviced apartments. 

For employers, the Government will also offset 8 per cent of the wages for each Singapore employee, with the grant kicking in this July.

The limit for the Wage Credit Scheme will be raised from S$4,000 to S$5,000 for qualifying wage increases given in the calendar years 2019 and 2020. Under the Wage Credit Scheme, which was introduced during Budget 2013, the Government co-funds wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000. 

For wage raises in 2019, the Government will co-fund 20 per cent and in 2020, 15 per cent. 

These new wage measures apply only to Singaporean workers.

Ms Margaret Heng, executive director of the Singapore Hotel Association, welcomed these initiatives, saying that it will bring some form of relief to the hotel industry. 

“We are particularly appreciative of the hotel property tax rebate of 30 per cent, the corporate income tax rebate as well as the job support scheme.

“Hotels do have high operating costs and manpower is the largest component, so these measures will help to some extent,” she said.

Ms Alicia Seah, director of public relations and communications at Dynasty Travel, told TODAY that the Government’s financial support will help with reducing the tour agency’s operating costs for the next two to three months until the public health crisis stabilises. 

“We are confident that the Government and relevant authorities will provide the necessary support for the country’s road to recovery,” she said.

URGENT NEEDS

For one company at least, the grant to support wages may not come quick enough.

Dr Kevin Cheong, executive director of tourist attraction Sentosa 4D AdventureLand that offers a 4D theme park ride, is unsure if his business will still be around by July since business has been dipping steadily in the past weeks.

“My (earnings) have been down 50 per cent in these two weeks… I don’t know how long I can last. I don’t want to belittle the help and I am thankful, but I was hoping for something more helpful.

“I think only people who are hit like us will understand that the gravity of the issue is more than just a few percentage points when three-quarters of your business has gone overnight.”

Dr Cheong added that some wage support which can be provided by March and April would have been more helpful.

In the same vein, Mr Kliff Ang, director of tour agency Asia Travel Group, said that the cash grant to offset the wages of Singapore employees would not be that helpful for companies that rely heavily on foreign workers.  

“These industries, like the hotel industry, tap mostly foreign workers… so (whether or not the wage offset cash grant will be helpful) depends on the labour composition of the company.”

Instead, Mr Ang and other F&B business owners told TODAY that they had hoped for measures such as the foreign worker levy waiver, which was introduced in the relief package during the 2003 severe acute respiratory syndrome (Sars) outbreak. No such measure was announced in this year’s Budget.

‘BETTER TO HAVE EXTENDED HELP, DIRECT REBATES’ 

Looking to ease some of the out-of-pocket operation costs that make up a large portion of their cash-flow expenses, some operators were hoping that the Government would introduce more rental rebates.

For food services and retail businesses, what the Budget catered for was that tenants at hawker centres and markets that are managed by the National Environment Agency will get a full month of rent waived for one month.

Other government agencies such as the Housing and Development Board will provide a half-month rent waiver to their commercial tenants.

Mr Low Teck Seng, chairperson of the Tiong Bahru Hawker Association, said that during this lull in business, it is helpful to have a month's worth of rental fee waived for stallholders.

However, a one-month waiver may still not be enough should the disease outbreak continue to be active for a few more months, he said.

For businesses that operate out of private properties, the Government said that landlords will be granted a 15 per cent property tax rebate for commercial properties that qualify.

In his Budget speech, Mr Heng strongly urges landlords to pass the rebates on to their tenants by reducing rentals.

Not everyone is optimistic about this though.

Mr Andrew Tjioe, the president adviser of the Restaurant Association of Singapore, said: “The rental rebate of half a month at government-owned properties is very little and when the major developers or landlords see this, I don’t think they will give more than (what the Government is giving).”

However, economists told TODAY that they agreed with the Government’s decision to roll out the tax rebates upstream for the landlords.

Mr Song Seng Wun, an economist with CIMB Private Banking, said: “It’s far easier to deal with the landlords themselves rather than to go down to the retail level. This has been done before and should be quite straightforward in terms of how large landlords pass down to their tenants.”

For example, real estate giant CapitaLand Group on Tuesday announced that it will be passing on the full savings of the tax rebate to their retailers.

Still, Mr Song acknowledged that the challenges could arise with smaller firms that do leasing — in that they may try to wiggle out and pretend not to know of the measures that have been introduced. ADDITIONAL REPORTING BY YONG JUN YUAN

Related topics

Budget 2020 SG Budget 2020 business rebate tourism F&B retail

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